When I bought GROW it was based on a recommendation from a friend, and I didn't crunch the numbers because I took a small position (20 shares). I know the pitfalls of not doing your own research, so I don't want to get into that. I am just curious as to what makes this stock so overvalued. I know they have grown relatively quickly, but there doesn't seem to be a ceiling yet. I think they are splitting after the first of the year, but I am not too sure about that. It seems to me that due to their low volume, lack of interest at the fool, and no analyst opinions that the street hasn't picked up on these guys yet. Any explanation as to Global being overvalued would be appreciated. Thanks in advance.
I will take a stab at this.Their TTM EPS was $1.56, which put into the DCF calculator on moneychimp.com with 30% growth for the next 5 years and 2% thereafter yeilds $51.80 / share. So the question becomes, can they grow at over 30% per year?They obviously had a huge year in '06 which, as far as I can tell, was thanks to the large increases in precious metal prices, but it also says a lot for their fund managers. Their assets under management grew significantly in '06, and with their new director of institutional services, they could continue to grow in the future. I personally look for 20-30% growth in 2007, but as I am far from an expert on the company I'm not willing to bet too much on that estimate.If they fall within my estimates then I would look for a fair value of $45 - $55 for a share. When I bought at around $30, it looked really good, now at $70 it looks overvalued.On the other hand, I am relatively new to this, and I dont know how to explain the crazy run-up it has had recently. My only guess is that after its stellar year it has gained publicity and the big money is starting to invest in it. You are right that they are splitting the shares in january as well as offering a $0.50 dividend ($0.25 post split) which are both bullish signals.After reading over what I wrote above, I realize that while I do think it is overvalued now, I dont have any idea how much it is overvalued, and I'm not sure that it will be reflected in the share price any time soon. There will probably be a pull back just because there has been such a fast run-up, but the question is whether or not it will rebound after the pull back or not. If anyone wants to add their opinions or insights to my hodgepodge of thoughts, I'd appreciate it.
I can't say whether or not this stock is overvalued, but I'm definitely getting that vertigo feeling now. Now that volume is above average again on an up day like this, it certainly seems like some financial institutions disagree with the overvalued sentiment. I planned on holding for at least another year, but these big upward moves make me nervous. I would much rather have +1% a day, because now I'm losing sleep waiting for that 20% pullback. :-)By the way, I recently just found this grow related fool article:5 More Top Small CapsBy Tim HansonOctober 27, 2006We're back again this week to help you identify more promising small caps worthy of your investment dollars. Why do we do this? Because: 1. Underfollowed small-cap stocks offer great returns. 2. Wall Street is covering fewer stocks than ever before, making now a great time to start looking for mispriced small caps. 3. Small caps can be dangerous when they're underfollowed, so we try to shed a little more light on the asset class for you.....[can't figure out how to properly paste table, but mentions that GROW has zero analysts following]http://www.fool.com/investing/small-cap/2006/10/27/5-more-top-small-caps.aspx
WHO, I am definately with you on the vertigo feeling. I am not sure when it will end. I am curious to see if they keep rising up until the split. But your last sentence is the thing that keeps me so confused about this company. You are right on the money about the volume, but I can't understand why there are no analysts following. Will the analysts pick up on them? If so how much higher can they go? Any ideas?
As a long term investor, I am not too well versed in technical analysis, but due to the trepidation that many (including myself) have about the short term price movement of GROW I thought I might take a shot at it.Here is the 6 month daily chart: http://tinyurl.com/yn6atvAt around Nov 20th it hit $54 as its first resistance after the big run-up. It went back down and then quickly broke above that resistance and went up to $62 which became its new resistance point, and then went back down to the $54 range which became its support. It then broke above the $62 resistance up to around $67 and rested back on the $62 support. Now it has broken above the $67 resistance up to around $72 and yesterday came back down to $67.If things continue as they have, $67 should be the new support point and the stock should bounce off of it. I believe however that if it does go below the $67 support, that it will not go below the $62 support (very soon anyways) since the volume is still high.As I said, I'm not a TA expert, so feel free to shoot holes in my analysis. - Matt
taken from Yahoo:Short % of Float (as of 12-Dec-06)3: 21.00% (not sure how they got 21% : 1.27M / 6.56M = 19.4%)Prior Month was 869.46K shares short, this month is 1.27 Million.Somebody(s) are betting it is over-valued.
How right you are. Last time it pulled back this quickly it bounced pretty hard off the bottom. I'm very interested to see what happens this time around. I ended up folding yesterday once I saw that it was going to be another down day. So much for holding for another year! I need to work on that hair trigger ... (I know it's not the Fool way).
I folded and sold as well, but I will be watching for a chance to get back in.
I got out yesterday too. But I will be waiting as well...I just had to fold while I was still up.
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